Coinbase, which is based in the United States, started doing business just two years back in Japan. But the exchange has decided to stop doing business there because of how the market is doing.
Customers have until February 16, 2023, to get all of their money and other assets out of their accounts.
This Monday, the company announced that it will “halt” doing business in Japan.
After February 13, any virtual assets linked to the Coinbase account will be sent to the Legal Affairs Bureau of Japan and converted to JPY.
Coinbase Launched in Japan
Coinbase was hopeful it would be able to expand its business in one of the largest crypto markets when it launched its operations in Japan. It was back in August 2021 when the exchange entered Japan.
The exchange said that it was aiming to offer the best and most useful products and services to Japanese users and investors. It also wanted to offer several retail goods based on the top five trading assets.
Current Predicament
Coinbase has been in the digital asset business for a long time and has a well-known brand. Despite all of that, it has not been able to break into the Japanese market.
Sources say that BTCBOX, GMO Japan, Bitbank, Coincheck, and bitFlyer are the top five trading exchanges in terms of trading volume.
In Japan, where the market tends to favor goods and services that are made or done there, FTX’s failure may have made people even less trusting of foreign subsidiary platforms.
Kraken, another US-based exchange, closed its Japan office for the second time at the end of 2022.
In February 2022, FTX, which is now discredited, bought the Japanese exchange Liquid, which used to be called Quoine.
This was after a hacker broke into Liquid and stole $90 million from its wallets. But FTX itself went bankrupt before the end of that year, and many Liquid clients are still waiting to get their money back.
The recent bear market in the digital asset trading business, which has hurt several well-known companies, is likely to make it hard for Coinbase to start up in Japan.
A little over a week ago, Coinbase said it planned to cut its staff by an additional 20%. The 20% cut would mean 950 jobs, cutting Coinbase’s operational costs by 25%.
In a filing with the SEC, it was also said that the company could lose up to $500 million by 2022.
The price of Coinbase’s Nasdaq shares dropped from $252 in September 2021 to just over $50 as of yesterday. This is most of the drop happening in the first few months of 2022.
In June 2022, CEO Brian Armstrong said that 18% of the company’s employees would be let go. He said that the slowing economy and the likelihood of a long “crypto winter” were the reasons.
When the crypto market was mainly bullish, their business grew really fast. Almost every week, they were able to bring in new use cases for cryptocurrencies, making them highly attractive to users.
Armstrong has sold about $300 million worth of his own Coinbase stock, and other company employees have sold about $5.8 billion worth of their shares.
Farewell, Gamblers!
Even though there are so-called “new use cases,” most trading of digital assets is still based on speculation. The “users” try to make money in their local fiat currencies.
Asset prices are still the main thing people talk about when they talk about blockchain, and few people can think of other uses.
Trading exchanges are still the most profitable businesses in the blockchain industry. At least for the people who started them and investors with a lot of connections.
There has been a laser-like focus on speculative profits and the hype around quick growth in fiat value. It has been a big reason why BTC and other blockchains haven’t caught on in the real economy.
Investors want to buy and keep assets more than they want to use or sell them. This is because they are afraid of losing money in the future if they are spent.
So, the ongoing bear market and the eventual demise of even well-known exchange companies could be good for blockchain in the long run.
True new use cases must offer real-world economic benefits or even new economies. This would bring back interest in the potential of the technology.